Dispelling the myth of a single payer system
As enthusiasm grows strong for Medicare for all, I have looked to other nations who have stable and true single payer systems. Much to my surprise, it wasn’t Switzerland, Canada, Sweden, Norway or the U.K. It was Taiwan.
To dispel misconceptions, I will attempt to summarize the various types of Universal Health Care systems as well as their pros and cons. I will be discussing health care systems in the following countries: Canada, U.K., the Scandinavian model, Switzerland, and Taiwan. To assess their quality and compatibility with the U.S., I will concentrate on cost vs. quality as well as cost and life expectancy as a measure of efficiency.
Universal Health Care is a system set by law to provide health care services to most or all of citizens. The main goal is to manage cost, access, and quality of service while providing guidelines and regulations on the Health Care Industry as a whole, and monitoring for fraud, neglect, and quality. Universal health care can be determined by three critical dimensions: who is covered, what services are covered, and how much of the cost is covered.
UHC is the umbrella term for many different models of coverage: multi payer (most commonly known and used) and single payer, are the two main branches. Except for Taiwan, all other Universal Health Care models we refer to in the west, are mixed models that provide both private and public coverage. “Single-payer” only addresses the how cost is covered. It refers to a system funded from a single source and nothing else. In most cases, the holder of the fund is the state. Of course many times you will see a mix of private and public funding, but for the most part, it means it is controlled by the current sitting government. Multi payer system refers to multiple funding sources including private insurance partially funded by employers and employees and public tax revenue.
Proponents of single payer systems have been lauding Scandinavian countries who use a form of the 'Beveridge Model' of health care systems that features public health providers in addition to public health insurance. These are devolved systems with limited involvement from the central government. One can argue these are single-payer systems only on a regional level, and should really be called multi-payer systems. Norway as a representative of the Scandinavian model, spends $6,140 on healthcare per capita which comes to 9.3% of GDP and has a life expectancy of 81.5 years. Norway’s population stands at 5.5 million. Adults in Norway pay out of pocket deductibles which covers about 15% of the overall healthcare cost.
Coverage is universal and automatic for all residents. It is financed through national and municipal taxes. Private health insurance is available for wider faster access and choice for private healthcare providers and 91% of these policies are paid for by employers. This represents about 15% of the workforce in Norway. Acute services are strictly funded and covered by the government. The Norwegian government, much like most or even all of UHC, is still struggling with long wait lists for their citizens. They’ve recently managed to lower wait time for treatment by 4 days from 60 days, and aim to reach 50 as their stated goal. Same issue is still a continuous struggle for wait lists for: diagnosis, specialists, and new treatments not yet listed under covered services by the government. They are also one of the highest spenders for HC globally. In order to afford the welfare state, taxation and vat is at a high level progressively structured between 38%–45% on income and profit and represents over 40% of GDP.
Switzerland is another example brought by M4A advocates even though it is wholly reliant on private insurance and the state only takes part in regulating cost, mandating coverage from its citizens, and observe and monitor its quality. The Swiss healthcare system is geared toward the general goals of keeping the system competitive across regional lines, promoting general public health and reducing costs while encouraging individual responsibility. Swiss citizens have full freedom of choice among the recognised healthcare providers competent to treat their condition on the understanding that the costs are covered by the insurance up to the level of the official tariff. There is freedom of choice when selecting an insurance company (provided it is an officially registered caisse-maladie or a private insurance company authorised by the federal law) to which one pays a premium, usually on a monthly basis. Switzerland’s life expectancy is one of the highest in the world standing at 83.8 years (third higest). Healthcare costs in Switzerland are 11.7% of GDP, and cost is capped at 8% of individual income to curb out of control expenditures. Switzerland spends about $6,080 per capita on health care, and has one of the highest incomes per capita in the world with a population of 8.3 million residents.
Switzerland has the highest density of nurses among 27 measured countries, namely 17.4 nurses per thousand people, and 4 per thousand practising physicians. In the 2015 Euro health consumer index survey Switzerland was placed second, and described as an excellent, although expensive, healthcare system. Switzerland is a free market universal healthcare solution driven by competition and quality curbed by regulation and mandated participation.
Canada is one of the most interesting countries to observe as they have dealt with a constitutional lawsuit when attempting to nationalize their healthcare in Quebec and eliminate private insurance over the violation of the Quebec Charter of Human Rights and Freedoms. Healthcare costs are currently rising for Canadian citizens and are projected to reach slightly over 10% of individual income towards healthcare costs. These increases have now surpassed 50% over the last decade. According to a Fraser Institute study, The Price of Public Health Care Insurance, a family consisting of two parents and two children will pay up to $11,786. Canadians are the beneficiaries of a world class healthcare service yet are still faced with long waits, rising costs, and an overloaded system. With 36 million people residing in Canada, in 2017, total health expenditure reached $242 billion, or $6,604 per person. It is anticipated that, overall, health spending will represent 11.5% of Canada’s gross domestic product (GDP).
The U.K. NHS used to be the crowning glory of Britain. Their model was one of the most successful at reaching and providing care for their citizens but also a source of income as Britain exported their experts to other nations to provide a model of care that is exemplary and profits were used to boost the system. However, in recent years, care has deteriorated, waits became long and life threatening, and cost has risen above the government allotted spending of their HC budget. With 65 million people residing in the U.K., ONS’s new internationally-comparable “health accounts” show that the UK’s total healthcare spending in 2014 was £179 billion, or 9.9% of GDP. Tax rates in the U.K. range from 20%-45% progressively as rate of income grows. Life expectancy in the U.K., currently stands at 81.6 years.
With a relatively high life expectancy, come also challenges. A growing aging population with increased medical needs, recent increase in cases of obesity and diabetes, or antibiotic resistance, and the rising costs of medical advancements and cutting edge technologies and therapies. It is estimated that progress in medical technology costs the NHS at least an extra £10bn a year. The Nuffield Trust (from this report) estimates that the aging and growing population alone could mean we need another 17,000 hospital beds by 2022 . The number of doctors, nurses, other staff and equipment all have to meet demand. More and more turn to privatized care to fill in the gaps of the NHS. The low spending on NHS, is well demonstrated in the quality of care, long wait lines, and growing frustration of the British people having to depend on each elected government to increase funding or pay privately for proper care.
This is where we reach Taiwan. Not a traditionally regarded a “western” nation, Taiwan, a small island in east Asia, is a disputed Chinese territory under one-china policy. With 23.5 million citizens, it is a small yet sucessful democratic, constitutional government. Bloomberg has recently conducted a survey ranking health care quality utilizing indexes it considers factors such as the cost, life expectancy, and GDP of the country. Taiwan was moved up from 12th to 9th. Measuring quality by only using cost and life expectancy does not paint a clear picture of quality, but it does serve a purpose when looking at all available data and drawing conclusions of viability, size, and continuous improvement. Taiwan has been changing and reforming their health care system for the past 30 years. In 1987, the government set up a planning commission and studied other countries’ healthcare systems. Taiwan looked at more than ten countries and combined their best qualities to form their own unique system. In 1995, Taiwan formed the National Health Insurance (NHI) model, a compulsory social insurance plan of a single- payer.
By 2004, they have reached a cover of 99% of citizens. Due to fraud, the system was changed in 2002 from fee-for-service to a global budget for cost containment purposes. To accommodate to the growing needs of a modern Healthcare system, Taiwan has increased it’s health expenditures per GDP from 5.9% - 6.8% between 2013 and 2014 when they experienced one the the highest per capita spending of $2,546 per person. 62% of Taiwan’s healthcare expenditures are funded by the public sector with the remaining 38% covered by out-of-pocket private funds. Taiwan has only private supplemental indemnity health insurance; it covers specific diseases such as cancer or disasters like injuries from traffic accidents. It is a cash benefit, and the money is used to help pay for copayments, hire special nurses, and buy nutritional foods — not for genuine in-patient medical services, which are covered by the NHI.
Pubic satisfaction with the NHI has been high, averaging in the 80% range in recent years. Waiting lines for visits and procedures, if any, are short, and patients have free choice of providers, as there is no gate-keeper system such as that in the UK’s National Health Service or in American HMOs. However, Taiwan’s system is far from perfect and far from a model the U.S. can adopt. From population size, homogeneity, percentage of poor population that requires full government subsidy, a constitution that mandates the government to provide healthcare, the ability to determine market prices for services and goods, and three decades of trial and error ironing out of the inevitable creases of such policy.
Medicare for all stipulates very specific guidelines for implementation of single payer healthcare;
- Eligibility for all residents: with over 300 million residents, there is no other country in the world we can draw from for this scale. Even in places like the U.K. and Canada, regions have been tasked with drawing specific laws and practices that apply for their population. Centralizing through the federal government every part of this service will be a constitutional uphill battle for the federal government against the states and specifically red states. Residency also isn’t necessarily citizenship but this would be up to current HHS department to determine (which begs the question whether these stipulations would change with each government in power).
- M4A coverage: HHS is the only government body to determine changes to the benefit package and will make recommendations to Congress to improve or adjust the benefit package. The bill allows each state to provide additional benefits so long as the state covers the expense of doing so. HHS is directed to make national coverage determinations with respect to experimental services and drugs, and the bill extends the Medicare appeals process to these coverage decisions. When the Trump administration is already chipping away at women’s and LGBT medical rights, leaving such a substantial duty and responsibility in the hands of a single group nominated by a sitting president is less than reasuring.
- Ban on cost- sharing: no deductibles, coinsurance, copays, or similar charges can be imposed for most benefits covered under M4A. There isn’t a single nation who relies on tax alone to cover for their universal healthcare especially one that eliminates the private pool of funds from HC marketplace. The bill would also prohibit balance billing by barring providers from imposing an additional charge to beneficiaries for benefits provided and encourage generic drug use by curtailing drug prices. This level of market control over goods and services will inevitably create a massive bottle neck for providers who are well regarded not to mention the legality of such provisions in the U.S. The healthcare industry represents 10% of our workforce. M4A pricing is capped at 40% of market prices. One of the shortcomings of the Taiwanese system was a shortage of doctors and nurses as well as the lack of satisfaction on their part to have their income reduced. Now imagine a 40% revenue cut for 10% of our workforce. As it stands today, many providers prefer to not take medicare patients. The main issue has been dealing with billing.
- States participation: For people who live in NY or California, it is predicted that benefits would be expanded and include not yet federally approved services and drugs. The same cannot be said for red states who will, at that point, take away private insurance provided by employers, and mandated the minimally required services dictated by the federal government. Vast majority of Americans, are very satisfied with their employer’s insurance. Employer’s insurance guarantees that corporations participate directly in healthcare expenses as well as compete for better benefits with their customized coverage. Eliminating this part of the funding as well as marketplace competition and mandating a medicare style one size fits all solution, is something to consider especially when dealing with a massively diverse population as Americans.
- Provider’s value: M4A directs the task of determining a healthcare provider’s “value”. The Secretary of HHS is to consult with the Medicare Payment Advisory Commission to create the relative value of a physician, a nurse, a medical professional, etc. In Taiwan, the frequency with which patients see their doctors is unusually high, but their visit time is exceptionally low. They have calculated a visit time of 2–5 minutes with your physician in order to keep up with a growing pace of patients as well as be able to keep their clinics afloat amidst controlled prices, and an open flow of patients. Doctors are paid by how much revue they bring to the hospital. This was their way of curtailing long lines and waiting lists that have become a staple of single payer in recent decades.
- Administration of M4A: Medicare for all ultimate goal is to remove the private insurance industry all together. The main claim is that all this administration fees are eating at funds that can go directly to healthcare benefits. However, the federal government, outside of not being known for it’s efficiency, has never actually run a large scale administrative body for healthcare benefits. Currently, Blue Cross a private insurance entity, is running our medicare program. They cannot nationalize these companies, they do not have the experience and knowhow, and have constantly failed our veterans when trying to run their own. In Taiwan, the administrative budget for the NHIA is 1.07% of the NHI’s expenditures. That budget constrains funding for other tasks, including improvements and review of the fee schedules regarding continuously changing medical technology, health services research by academics or researchers in think tanks, health care technology assessment, workforce planning, more general payment reform (for example, a move to bundled payments), and continuously upgrading the IT system. Though the Taiwanese have recognized this deficiency, they have yet to resolve it. Healthcare may be regarded as a human right, but the healthcare industry produces product that must have the ability to grow, compete, and evolve. Market incentives are imperative for technology, research, and development.
Universal healthcare for the U.S. is within reach. It is a duty and moral obligation for us as a nation to take the necessary steps to achieve fair, equal, and affordable access to every citizen. The road to determining the easiest path is ten times more complicated as we are unique, we are much larger in size, and we have a different culture, politics, and population than the countries we look up to to draw a proper example from. American healthcare is top quality in the world. People come from all ends of the earth to study and work here. American doctors are the only ones not having to take any training when moving to other countries. Our cutting edge technologies and alternative therapies are second to none. These achievement were gained through through completion, and market incentives.
There is plenty of room for the federal government to step in and create clear policies, guidelines, laws, and provide funding for universal healthcare. The Swiss model demonstrates how superior care can be when you mandate participation, cap expenses by income, but leave the rest for the market to resolve. We can and should build on top of the ACA to do the same here. The battle for M4A is currently won in echo chambers. It is a losing battle but doesn’t have to be. We can expend medicare for the poor and old, cap expenses by income, create a healthcare tax, and allow employers to compete for employees with coverage.
We can work together to find what works for each state but demand that all participate. This narrow mindedness of a unique, never been tried before, M4A, is bound to fail the American test. This isn’t a bargaining chip, nor a popular notion country-wide. The details of this plan are widely unpopular yet seem ignored and unknown to even those who parade it. There’s much to be said in praise of any country that protects its citizens and cares for them. There’s much more to be said for those who do it right.
Quoted sources: